Rupee declines to new 5-year low

The Indian rupee slumped to the lowest since mid-2003 as stocks slid, adding to speculation that investors will take more money out of the nation's equity market. The local currency completed its eighth weekly loss, the longest drop since December 2005, on signs that the US economy is headed for a recession that may hurt global growth. The rupee also fell after the RBI said the current-account deficit widened to a record in the three months to June 30. The rupee fell 1% to 47.0850 per dollar, the lowest since June 2003, at 5 p.m. to close on Friday in Mumbai. The currency lost 1.15% this week.

The benchmark BSE Sensex slipped over 4% during the week due to concerns over the health of the US economy amid the raging financial crisis. The index has lost 38.3% this year after advancing 47% in 2007. The MSCI Asia Pacific Index declined 2.1%, taking its loss this week to 7.7%, the most since Aug. 2007. Overseas investors have sold Indian equities worth a record US$9.2bn more than they bought this year, the report stated. India's current account gap, the amount by which imports exceed exports, remittances and other income, increased to US$10.7bn in the April-June period from US$1.04bn in the previous quarter, according to the RBI data.